Industrial production numbers from the Fed, chart by Mish

The Fed's Industrial Production Report for January continues to suggest production has peaked this cycle.

Industrial production was unchanged in January after falling 0.6 percent and 1.0 percent in November and December, respectively. In January, manufacturing output moved up 1.0 percent and mining output rose 2.0 percent following two months with substantial decreases for each sector. The output of utilities fell 9.9 percent in January, as a swing from unseasonably cool weather in December to unseasonably warm weather in January depressed the demand for heating. At 103.0 percent of its 2017 average, total industrial production in January was 0.8 percent above its year-earlier level. Capacity utilization declined 0.1 percentage point in January to 78.3 percent, a rate that is 1.3 percentage points below its long-run (1972–2022) average.

Some of the decline was weather-related. Nonetheless, the peaks are still back in August or September despite a rebound in manufacturing. 

Industrial Production Consensus vs Actual 

Chart of consensus vs actual from Bloomberg Econoday

Revisions make the manufacturing rebound look a bit better than it was.

The Fed revised manufacturing output for December from -1.3 percent to -1.8 percent. 

Manufacturing then bounced 1.0 percent in January.

Recession Lead Time After Industrial Production Peak 

Recession lead times vs industrial production tend to be very small, typically 1-2 month. 2001 and 2020 were notable exceptions.

Industrial production numbers tend to jump quite a bit. 

If the numbers have indeed peaked, then the numbers suggest recession is at hand.

Data Suggests More Rate Hikes

Recessions aside, earlier today I noted that Consumers Go on Huge Retail Sales Shopping Spree in January After Months of Weakness

And the CPI Accelerates 0.5 Percent in January, Up 6.4 Percent From a Year Ago

The Fed has its hands full for sure. Expect more hikes.

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